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The Koyfin financial site published their selections of the top ten most important market themes and trends for the past decade and it makes for fascinating reading.

A few of the charts merely quantify things most investors already know – U.S. equities were the top performing asset class, technology and consumers sectors led while materials lagged.

The comparison of the largest individual stocks by market capitalization now versus 10 years ago offers a valuable lesson in how much markets have changed. In 2010, the biggest companies were Petro China, Exxon Mobil, Microsoft, Industrial and Commercial Bank of China and Walmart. Now, the largest stocks are Saudi Aramco, Apple, Microsoft, Alphabet and Amazon.com.

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The list of top performing stocks for the decade provides a number of surprises. At 3,655 per cent, Netflix is not a surprise as the best performer. But the next six names on the list are rarely mentioned in financial media: MarketAxess (3,034 per cent), Transdigm (2,107) , Abiomed (2,205), Broadcom (1,943), United Rentals (1,529) and Regeneron Pharma (1,421).

The tenth graphic in the report shows changes in the largest ETFs and mutual fund since 2010. The mutual fund category highlights investors’ wholesale switch to passive, indexing strategies.

The big lesson from the exercise for investors is more of a warning – in the decade ahead there will be a lot of change. For every Microsoft that is able to reinvent itself and stay on top, there will be many more Walmarts that seemed unstoppable in 2010 but fell behind.

Technology stocks could be listed among the top performing stocks of the decade in 2030, but it is likely to be a different set of companies. It’s also entirely possible that the list of top stocks, now dominated by U.S. companies, will feature companies based in the developing world.

The only guarantee is that 2030’s list of top themes will look markedly different from this one. History is useful in that provides perspective and motivates an open mind to inevitable change, within markets and elsewhere.

-- Scott Barlow, Globe and Mail market strategist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

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Stocks to ponder

Martinrea International Inc. Easing trade tensions between the U.S. and China, combined with the USMCA (United States-Mexico-Canada Agreement) nearing completion, have provided support for the stock. It has enjoyed a significant rally this week. Last month, the company reported strong third-quarter financial results and the stock’s valuation has room to expand. Earlier this month, the stock exhibited a bullish technical pattern - a “Golden Cross”- with the 50-day moving average crossing above the 200-day moving average. Jennifer Dowty has this profile of the company.

Hardwoods Distribution Inc. This stock is a way for investors to play the U.S. housing market given that approximately 90 per cent of the company’s sales are from the U.S. The share price plunged in 2018; however, industry fundaments are improving. On Dec. 17, solid U.S. housing starts and building permits data were released. The company’s fundamentals are recovering. Last month, the company reported better-than-expected third-quarter earnings results. Meanwhile, the stock is trading at an attractive valuation – at a discount to historical levels. From a technical analysis perspective, the share price appears to have put in a double-bottom with a bullish “Golden Cross” appearing last month. The company is covered by five analysts, and all five analysts have buy recommendations. Furthermore, management has announced a dividend increase every year since 2012. Jennifer Dowty profiles the stock.

The Rundown

A five-year big bank dividend growth scorecard

The big banks differ in all kinds of ways, but one area of similarity is their dividend growth patterns over the past five years. Rob Carrick tells us more.

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Q&A: What BlackRock’s chief strategist for Canada predicts for investors in 2020

The S&P/TSX Composite Index has rallied 19 per cent year-to-date with 10 of the 11 sectors delivering double-digit gains. Can these impressive gains continue in 2020? Jennifer Dowty speaks with Kurt Reiman, BlackRock’s chief investment strategist for Canada, for his thoughts on how investors may want to position their portfolios to make money in 2020. When we last spoke with him in mid-2018, he expressed confidence that the bull market and economic expansion still have years to run – and so far, it’s been an accurate call.

Why stock investors should feel cheerful about prospects for 2020

Candice Bangsund, vice-president and portfolio manager, global asset allocation, for Fiera Capital, has some encouraging words for investors as the new year nears.

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

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Wednesday’s Insider Report: Two executives are accumulating shares in this dividend stock

Tuesday’s Insider Report: Two dividend stocks that are being bought

Number Cruncher: Which Canadian banks can best weather pressures on profitability?

Globe Advisor

Why investors should pay for all investment fees out of non-registered accounts

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

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Ask Globe Investor

Question: I’m interested in adding to my real estate investment trust exposure by buying the BMO Equal Weight REITs Index ETF (ZRE), but I have read that buying funds at year-end can be a bad idea. Is that the case here?

Answer: If you’re investing in a non-registered account, you have to be careful buying exchange-traded funds (or mutual funds) in December because you could get hit with an unexpected tax bill. The end of the year is when many funds declare capital gains distributions, and these amounts are taxable even though they are typically reinvested in the fund and not paid in cash.

The good news is that ETF companies give you advance warning of these distributions so you can avoid unpleasant surprises. ETF providers typically publish estimates of reinvested distributions in a press release that goes out in November. This information is also provided on ETF company websites, but you may have to hunt around to find it.

In the case of ZRE, BMO Asset Management announced on Nov. 15 that the ETF will declare a year-end reinvested distribution of about 77.9 cents a unit – equivalent to about 3 per cent of the ETF’s net asset value. It’s not a huge amount, but if you wait until the New Year to purchase the ETF you’ll avoid the tax hit. Or you could purchase the ETF in a registered account, in which case no tax would apply on the year-end distribution anyway.

One other thing to remember about reinvested distributions is that you need to add them to the adjusted cost base (ACB) of your units (just as you would if you enrolled one of your stocks in a dividend reinvestment plan). If you forget to increase your ACB, you could end up paying more tax than necessary when you eventually sell your units.

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--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

Get ready for some Christmas cheer - this weekend John Heinzl and Tim Shufelt present the Stars and Dogs of 2019. And, don’t miss our annual Investor Clinic quiz.

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

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Compiled by Globe Investor Staff

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